Debt to cross Rs 1.2 lakh cr by fiscal-end

 Sarbjit Dhaliwal

Chandigarh, March 18

The state’s debt burden continues to grow. In the state Budget presented today, the government has projected that the state’s debt would jump to Rs 1,24,471.38 crore by the end of the next fiscal year.

It is estimated to be Rs 1,12,627.57 crore by the end of the current fiscal year and was Rs 1,02,234.48 crore last year.

Punjab has been borrowing money from market, besides taking loans against small savings and from other sources such as commercial banks and NABARD. The state had presented its case before the 14th Finance Commission, but it did not address the same as state’s market borrowing and loan against small savings was high.

Market borrowings and bonds are to the tune of Rs 68,451.95 crore and loan against small savings stands at Rs 21,086.56 crore. Loans from other sources are relatively small. In such a scenario, the commission did not touch this issue, it is learnt.

As the outstanding debt is above 30 per cent of the GSDP, it has created a committed interest liability of Rs 9,900 crore. About 21 per cent of the revenue receipts is spent on interest payments alone. This liability goes up every year. In 2000-01, the outstanding debt was Rs 29,099 crore. It shot up to Rs 83,099 crore in 2011-12, adding almost Rs 10,000 crore every year.

When Manpreet Singh Badal was Finance Minister, he took up the matter with the then Union Finance Minister Parnab Mukherjee. The latter had laid some conditions for the state government, but then Chief Minister Parkash Singh Badal and others did not agree to it and the state lost an opportunity to tackle this issue. Manpreet had to quit the Shiormani Akali Dal over the matter.

The 12th Finance Commission had declared that when the interest payments in proportion to revenue receipt are more than 20 per cent, the state should be considered as debt stressed. Punjab figures among the most debt-stressed states after West Bengal, Kerala and Uttar Pradesh. The 14th Finance Commission, however, did not concede to the state’s plea in this regard.

In fact, Punjab has suffered on two counts. Neither it got the grant-in-aid as a highly revenue deficit state nor will it get any relief on account of high percentage of outstanding debt from the 14th Finance Commission.

If the state’s debt issue is resolved, its fiscal situation will improve considerably. Else the state is caught in the vicious debt cycle. Its almost entire gross borrowings every year is exhausted in the payment of interest on outstanding debt. The debt burden thus continues to grow.